Key Points From the Sam Bankman-Fried Trial’s First Week

  • Gary Wang – who’s previously pleaded guilty to similar charges to what Bankman-Fried faces – testified that Bankman-Fried directed him to write code allowing Alameda Research to have a negative balance on FTX as far back as July 2019.

  • Ultimately Alameda took and spent at least $8 billion of FTX customers’ money, Wang said.

  • Wang opened by saying he committed crimes, did so with Bankman-Fried, Caroline Ellison and Nishad Singh and that he was hoping for no jail time as a result of his cooperation.

  • FTX had an insurance fund with an amount listed on its website, but this amount was essentially a randomly generated figure, Wang said.

  • For a while, FTX executives didn’t actually know how much Alameda owed its customers because of a software bug, Adam Yedidia said. The bug overstated the amount owed by $8 billion (essentially twice the real amount).

  • Alameda used FTX customer deposits to pay back its lenders, Yedidia said. Wang later confirmed that Alameda had returned lenders’ funds and that these funds “came from FTX customers.”

  • FTX presented itself as a safe custodian to investors like Paradigm, Matt Huang said.

  • Similarly, Bankman-Fried told Paradigm that Alameda had no preferential treatment, Huang said. Wang later said Alameda did receive special treatment (see point 1).

  • At no point did Bankman-Fried or anyone at FTX tell Paradigm that Alameda was exempt from its auto-liquidation feature, Huang said.

  • Paradigm has marked its $278 million investment in FTX to zero, Huang said.

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